The introduction of multichannel television (through wired/wireless cable, and
satellite) promises to bring a new world of entertainment and information to Latin
American consumers. What will the impact of multichannel television be? How will people's
lives be affected?

One way to study the impact of multichannel television is to think in terms of
time budget allocation. Each person has a fixed budget of 24 hours per day, which is
allocated among different activities (such as sleeping, eating, working, relaxing, etc.).
When a household obtains multichannel television, one would assume that some amount of
time would be allocated to watching these new television channels. Since the total time
budget is fixed, this time must be reallocated from elsewhere (such as broadcast
television, radio listening, reading, etc.) These issues are particularly important for
multimedia corporations (such as the Cisneros
Group, News Corp, Televisa, Time-Warner, Viacom) with holdings in television,
radio, newspapers, publishing, movies, sports, etc. The reallocation of the time budget
may result in gains for some divisions of the company, but losses for other division.

In the following, we will illustrate the potential impact of multichannel
television on daily life with some data obtained from the Los Medios y
Mercados de Latinoamerica Study 1996. We will be comparing those people who
currently have multichannel television against those who do not have it yet. We qualify
our results by pointing out the early adopters of a new technology may be somewhat
different from the laggards, and perhaps we should have made statistical adjustments.

TELEVISON

It is expected that the largest impact of multichannel television will be on
broadcast television. Typically, most people have regular patterns of viewing (e.g. in the
evenings), and the availability of multichannel television affords them more choices
within their usual time slots. Without multichannel television, broadcast television
accounts for 100% of all television viewing by definition. Within multichannel households,
we find that broadcast television accounts for 53% of television viewing, while viewing to
multichannel television (namely, the cable and satellite channels) account for 47% of the
viewing.

The 47% share for multichannel television is a pan-regional estimate across 19
countries. At this point in time, it is important to note that multichannel television is
unevenly developed in Latin American, both in terms of penetration levels and technology.

The most developed country is Argentina, with the highest penetration level
(over 60%) as well as the most sophisticated systems. The major cable systems in
Buenos Aires: Cablevisión-TCI2,andMulticanalall offer over 70 high quality
channels. So we find that multichannel television accounts for 58% of television viewing.

In Mexico, multichannel television penetration is under 20%. The two
major systems in Mexico City: CablevisiónandMultivisiónboth offer not more than 40
channels, and some households subscribe to a small package of 7 channels. So we find that
multichannel television accounts for 45% of television viewing.

In Brazil, multichannel television penetration is under 10%. At this time, there
is still a dearth of Portuguese-language programming made specifically for the Brazilian
audience. So we find that multichannel television accounts for only 28% of television
viewing, in no small part due to the tremendous strength of the broadcast television giant
Rede Globo. However,
a number of new Brazilian channels have been announced, and we may expect to see some
changes in the future.

If we accept Argentina as the eventual model of full-blown multichannel
television, then we can expect to see rapid erosion of the broadcast televison share of
television audience.

RADIO

Persons in mutlichannel television homes spend 16.0% of their time listening to
radio, while persons without multichannel homes spend 15.7% of their time doing so. Radio
is often an out-of-home activity (such as in a car). Even within homes, radio listening is
often a secondary activity (such as while reading, cooking, cleaning, etc.). We would not
have expected multichannel television to impact radio listening in any significant way.

NEWSPAPERS

45% of persons in multichannel television homes read weekday newspapers, versus
26% of person in non-multichannel television homes. Here, the difference may be due to the
fact that the early adopters of multichannel television are better educated and more
affluent. For example, 45% of persons in multchannel television homes have received 12 or
more years of education, versus 23% of non-multichannel television persons.

Print media are very different from television. Print has the ability to deliver
in-depth analyses in great detail (that is, most people can read faster than television
announcers can speak; and articles can be crafted with greater precision and deeper
thought than live off-the-cuff remarks on screen). Print is also available on demand (that
is, you can read your magazine anytime that you want, not whenever it is shown on
television). We would not expect televsion, either broadcast or multichannel, to ever
completely displace print media as the source of infotainment.

VIDEO TAPES

VCR penetration is about 40% in Latin America. Among the multichannel television
persons with VCRs at home, 52% of them rented tapes within the last month. By comparison,
among the non-multichannel homes with VCRs at home, 58% of them rented tapes within the
last month. There is a moderate drop, but we should note that the rate is much lower in
Argentina, where multichannel television systems offer several high-quality all-movie
channels (such as Cinecanal, Cinemax, HBO Ole
and TNT Latin America).

SUMMARY

Multichannel television will have an immediate impact on the broadcast
television industry. Inevitably, the introduction of more viewing choices will lead to
lower audience share for the broadcasters.

The impact on other media may be less obvious, especially those that are not in
direct competition with television. There will also be other impact beyond time budget
allocation by consumers. For example, the presence of regional news networks through
multichannel television will have an impact on the practice and monitoring of journalism,
in Latin America, both for the regional and local journalists.